@Mike9241 It's been very confusing since I've read everywhere how SEP IRA will reduce income and self-employment taxes...but I guess it only reduces the self-employment tax if you contribute for another person not yourself - as sole proprietor of the SEP IRA. I kept thinking it would be considered a business expense. It did help reduce tax by decreasing overall income. It helped go beyond the traditional IRA limit of 7000. Thanks for the clarification.
"For a self-employed person contributing to their own SEP-IRA, contributions are deducted as an adjustment to income on Form 1040, line 10a, using Schedule 1. SEP contributions reduce a person's adjusted gross income, reduce taxable income, and thereby reduce the federal income tax. SEP-IRAs do not impact the calculation of the self-employment tax, since that is calculated before SEP contributions are calculated. A self-employed person reduces income tax only by contributing to his or her own SEP-IRA.."
